Friday, May 25, 2012

Capital

Capital is considered evil by those wishing to control an economy by laws and regulations. Investment is not something the government can effectively execute, but is most effectively executed by investors seeking to use their financial resources to create wealth through growth. Economic growth is the result of increasing efficiency or by making a more sophisticated product from raw materials. If the government makes an investment, there is no discipline to make sure it is the right investment. There are also winners and losers from each investment because it simply cannot be performed equally across all parties that have an interest or stake in the matter. We have learned from eastern European countries that government cannot build a good car or a good anything. It all sucks. Unless there is the clear chance of both failing and succeeding in an investment, the right decisions to line up capital and innovation, are rarely made. The potential to make zillions must not be called "greedy" by the losers  who are driven by pure jealousy.  Remember, the basic premise of a free economy is that people make decisions to buy based on their freedom.  Nobody is being forced to purchase the goods, and all parties in the deal are acting voluntarily. The investor can either win or lose and are driven to perform  rigorous analysis to provide guidance on where investment dollars shout be funneled. The government has neither the insights as to how money should be invested nor the ability to make an investment fairly. Let this market move freely to determine where capital should be invested and we will see economic growth move us forward.  The billions in cash on balance sheets show the level of uncertainty of corporations because of policies such as Health Care and Dodd-Frank.  Turn this "capital driven economy" loose, and we will go beyond our wildest dreams in terms of economic growth and job creation.

No comments:

Post a Comment